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TORONTO, Sept. 13, 2012 /CNW/ -Transition Therapeutics Inc. ("Transition" or the "Company") (TSX: TTH; NASDAQ: TTHI), a
product-focused biopharmaceutical company developing therapeutics for
disease indications with large markets, today announced its financial
results for the year ended June 30, 2012.

Selected Highlights

During fiscal 2012 and up to the date of this press release, the Company
achieved the following significant milestones:

ELND005 (AZD-103):

On August 30, 2012, Transition announced that their licensing partner
Elan had dosed the first patient in a Phase 2 clinical study of ELND005
in Bipolar Disorder. The study is a placebo-controlled, safety and efficacy study of oral
ELND005 as an adjunctive maintenance treatment in patients with Bipolar
1 Disorder to delay the time to occurrence of mood episodes. As the
first patient has been dosed in the study, Transition will receive a
milestone payment of US$11million from Elan;

On May 14, 2012, Transition announced that a mini symposium entitled
"The Emerging Clinical Profile of Oral Scyllo-inositol (ELND005) in
Alzheimer's Disease: A Dual Mechanism of Action" was presented at the 12th International Stockholm/Springfield Symposium on Advances in Alzheimer
Therapies;

On April 26, 2012, Transition announced that three ELND005 poster
presentations were presented at the American Academy of Neurology. These presentations described responder analyses and characteristics,
along with findings on the effect of ELND005 on the emergence of
neuropsychiatric symptoms;

On September 27, 2011, Transition announced that Phase II clinical study
data of ELND005 (AZD-103) in mild to moderate Alzheimer's disease has
been published in the peer-reviewed journal, Neurology. The Neurology article is entitled "A Phase II randomized trial of
ELND005, scyllo-inositol, in mild-moderate Alzheimer's disease";

On July 15, 2011, Transition announced that ELND005 (AZD-103) Phase II
clinical trial data would be presented at the International Conference
of Alzheimer's Disease (ICAD) meeting on July 18, 2011;

TT-401:

On June 18, 2012, Transition announced the results of the Phase I
clinical study of type 2 diabetes drug candidate, TT-401. The Phase 1, double-blind, placebo-controlled randomized study enrolled
48 non-diabetic obese subjects in six cohorts evaluating six escalating
subcutaneous single doses of TT-401. TT-401 demonstrated an acceptable
safety and tolerability profile in non-diabetic obese subjects in the
study. TT-401 exhibited the expected pharmacological effect on glucose
and pharmacodynamic biomarkers at doses that were safe and tolerable.
The pharmacokinetic profile, assessed over 28 days, demonstrated a
half-life consistent with once-weekly dosing;

On December 12, 2011, Transition announced that the first patient has
been dosed in a Phase I clinical study of type 2 diabetes drug
candidate, TT-401. TT-401 is a once-weekly administered peptide being studied for its
potential to lower blood glucose levels in patients with type 2
diabetes and accompanying obesity;

Corporate Developments:

On November 22, 2011, Transition Therapeutics announced a US$5 million
private placement. Under the non-brokered private placement, Transition issued 3,703,703
common shares at a price of US$1.35 for gross proceeds of approximately
US$5,000,000.

Financial Liquidity

The Company's cash and cash equivalents and short term investments were
$19,012,345 at June 30, 2012.

Under the terms of the amended agreement with Elan, dosing of the first
patient in another clinical trial of ELND005 (AZD-103) triggers the
payment of a US$11 million milestone. The Company expects to receive
the US$11million milestone payment during the first quarter of fiscal
2013.

The Company's current cash projection indicates that the current cash
resources should enable the Company to execute its core business plan
and meet its projected cash requirements well beyond the next 12
months.

Financial Review

During the year ended June 30, 2012, the Company recorded a net loss of
$12,269,845 ($0.48 loss per common share) compared to a net loss of
$5,689,613 ($0.25 loss per common share) for the year ended June 30,
2011.

In fiscal 2011, the Company and Elan mutually agreed to modify their
collaboration agreement for the development and commercialization of
ELND005 (AZD-103). Under the terms of the modification, Transition is
no longer obligated to fund the development or commercialization of
ELND005 (AZD-103). The recognized net revenue of $8,951,400 ($US 9
million) in fiscal 2011 represented the agreement modification payment
that was received partially in lieu of the contractually required Phase
III milestone payments.

Revenue is nil in the year ended June 30, 2012 compared to $10,251,394
in the year ended June 30, 2011. The decrease in revenue is due to the
receipt of the US$9 million agreement modification payment received
from Elan in fiscal 2011.

Research and development expenses decreased $295,250 or 3% from
$8,493,975 for the fiscal year ended June 30, 2011 to $8,198,725 for
the fiscal year ended June 30, 2012. The decreases are primarily due to
decreased clinical development costs related to ELND005 (AZD-103) and
TT-301/302, decreased amortization due to the fact that the technology
and patents acquired from Protana were fully amortized during the
second quarter of fiscal 2011 and decreased salaries and related costs
associated with headcount reductions. The decrease is largely offset by
an increase in pre-clinical and clinical development costs associated
with advancing the TT-401/402 compounds.

General and administrative expenses decreased by $801,037 or 15% from
$5,208,317 for the fiscal year ended June 30, 2011 to $4,407,280 for
the year ended June 30, 2012. The decrease in general and
administrative expenses during the fiscal year ended June 30, 2012 is
largely due to decreases in payroll resulting from headcount reductions
as well as decreases in consulting, insurance expense and facility
lease costs. The decrease in general and administrative expenses is
partially offset by increased professional fees as well as increased
option expenses.

About Transition

Transition is a biopharmaceutical company, developing novel therapeutics
for disease indications with large markets. Transition's lead product
is ELND005 (AZD-103) for the treatment of Alzheimer's disease and
bipolar disorder. Transition also has an emerging pipeline of
innovative preclinical and clinical drug candidates. The other drugs in
the pipeline that the Company is developing are for anti-inflammatory
and metabolic indications. Transition's shares are listed on the NASDAQ
under the symbol "TTHI" and the Toronto Stock Exchange under the symbol
"TTH". For additional information about the Company, please visit www.transitiontherapeutics.com.

Extracts of the Financial Statements to Follow:

CONSOLIDATED BALANCE SHEETS

In Canadian Dollars

June 30, 2012

June 30, 2011

July 1, 2010

Assets

Current assets

Cash and cash equivalents

12,955,081

17,422,364

16,570,033

Short term investments

6,057,264

5,038,356

10,507,822

Trade and other receivables

43,658

155,477

125,501

Investment tax credits receivable

241,951

368,624

206,313

Prepaid expenses and deposits

316,286

751,000

549,218

19,614,240

23,735,821

27,958,887

Non-current assets

Property and equipment

215,000

400,581

605,637

Intangible assets

17,263,790

19,043,086

21,095,002

Total assets

37,093,030

43,179,488

49,659,526

Liabilities

Current liabilities

Trade and other payables

1,178,915

945,360

2,090,403

Current portion of contingent consideration payable

2,321,373

2,321,373

-

Deferred revenue

-

-

1,299,994

3,500,288

3,266,733

3,390,397

Non-current liabilities

Contingent consideration payable

1,434,958

1,434,958

3,081,500

Leasehold inducement

34,295

45,727

57,160

4,969,541

4,747,418

6,529,057

Equity attributable to owners of the Company

Share capital

165,334,259

160,498,537

160,498,537

Contributed surplus

13,168,411

11,840,574

4,800,368

Share-based payment reserve

2,977,032

3,179,327

9,228,319

Deficit

(149,356,213)

(137,086,368)

(131,396,755)

32,123,489

38,432,070

43,130,469

Total liabilities and equity

37,093,030

43,179,488

49,659,526

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSSFor the years ended June 30, 2012 and 2011

In Canadian Dollars

2012

2011

Revenues

Licensing fees

-

10,251,394

Direct costs of services

-

1,299,994

Gross Profit

-

8,951,400

Expenses

Research and development

8,198,725

8,493,975

Selling, general and administrative expenses

4,407,280

5,208,317

Loss on disposal of property and equipment

125,748

116,312

12,731,753

13,818,604

Operating Loss

(12,731,753)

(4,867,204)

Interest income

165,070

201,085

Interest expense

(851)

(530)

Foreign exchange gain (loss)

297,689

(348,133)

Change in fair value of contingent consideration payable

-

(674,831)

Net loss and comprehensive loss for the year

(12,269,845)

(5,689,613)

Basic and diluted net loss per common share

(0.48)

(0.25)

Notice to Readers: Information contained in our press releases should be
considered accurate only as of the date of the release and may be
superseded by more recent information we have disclosed in later press
releases, filings with the OSC, SEC or otherwise. Except for historical
information, this press release may contain forward-looking statements,
relating to expectations, plans or prospects for Transition, including
conducting clinical trials. These statements are based upon the current
expectations and beliefs of Transition's management and are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements. These risks and uncertainties include factors beyond
Transition's control and the risk factors and other cautionary
statements discussed in Transition's quarterly and annual filings with
the Canadian commissions.

SOURCE: Transition Therapeutics Inc.

For further information:

For further information on Transition, visit www.transitiontherapeutics.com, or contact: